For Itan, what rights does Itan have regarding Improvements if applicable law precludes assigning ownership?

According to Itan's 2025 Franchise Disclosure Document, if applicable law prevents a franchisee from assigning ownership of an Improvement to Itan, the franchisee must grant Itan a perpetual, royalty-free license. This license allows Itan to use, commercialize, and sublicense the Improvement in any manner Itan deems appropriate.

This means that while the franchisee might retain legal ownership in some limited sense, Itan gains unrestricted rights to exploit the Improvement commercially without paying any royalties to the franchisee. The franchisee essentially loses control over how the Improvement is used and who benefits from it.

This clause is significant for prospective Itan franchisees because it stipulates that any innovation or improvement developed during the franchise term, even if legally owned by the franchisee, can be freely used by Itan and its other franchisees. This could disincentivize franchisees from investing in significant innovations, as they would not directly benefit from their efforts. Franchisees should carefully consider this provision and its potential impact on their ability to profit from their own ingenuity.